The State of European Tech 2018 by Atomico

2018
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The State of
European Tech
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Contents
2018 Key Findings
The State of European Tech 2018
Tech & the European Economy
Diversity & Inclusion
Europe's Got Talent
Tech Hubs
Research & Development
Regulation
Investors & Investment
Great European Companies
Challenges
Mythbusting
Predictions
About
Appendix
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2018
Key Findings
It's been another record year for investment in European
tech and the sector is powering growth in Europe's
stagnant economy. Yet not everyone is benefitting from the
boom. The gains are not being democratized by investors.
Companies need to address diversity and inclusion tools
and unlock hidden talent pools.
Another record year for investment into the European
tech ecosystem
Europe urgently needs to fix its diversity & inclusion
problem
Europe's tech industry is the best hope for growth for
a stalling European economy
The gains from Europe's tech boom are not yet being
democratised
Mobilising Europe's hidden tech talent pool can unlock
huge upside
Europe is producing $B+ companies at a level that is
15x+ higher than a decade ago
Top highlight statistics for Europe
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02
03
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05
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What's changed for
European tech in the
past 12 months?
KEY FINDINGS
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Another record year for investment into
the European tech ecosystem
Europe urgently needs to fix its diversity
& inclusion problem
Record sums invested in Europe's technology
ecosystem- $23bn in 2018 up from just $5bn in 2013.
93% of all funds raised by European VC-backed
companies went to all-male founding teams in 2018.
There were four tech IPOs or direct listings of European tech
companies in 2018 that reached valuations of more than $5B
on opening day, including Europe's largest ever venture-
backed publicly-listed tech company, Spotify. In total, Europe
contributed three of the top 10 largest tech IPOs globally of 2018.
Almost half of women reported that they have experienced
discrimination in the European tech sector. This is a point
of clear tension with the 75% of respondents who think the
culture at their European startup is inclusive. In European
tech, discrimination appears to be someone else's problem.
CAPITAL INVESTED
CAPITAL INVESTED
TECH IPO COMPANIES
GENDER DISCRIMINATION
$23B
93%
4X $5B
46%
Key Findings
2018
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Eurostat
Europe's tech industry is the best hope for
growth for a stalling European economy
The gains from Europe's tech boom are not
yet being democratised
Europe's tech (software) industry is growing 5x faster than
the rest of the European economy in terms of Gross Value
Added, a level that has accelerated in recent years.
Pension funds are not yet democratising Europe's tech sector
boom - over the last five years, pension funds have invested just
$1.7B in European VC, but have invested 45x more in European
buyout funds, equivalent to more than $75B over that period.
The European tech workforce grew 4% in 2018 (source:
LinkedIn), a significant difference to overall EU employment
growth of 1.1%.
European tech growth and record success has not gone
unnoticed by family offices and high net-worth individuals
(HNWs). Over the last five years they have invested over $5bn
in European venture capital funds. Only government agencies
have invested more in European VC in that same period.
TECH INDUSTRY GROWTH
PENSION FUNDS INVESTMENT
EMERGING TECH HUBS
HNW INVESTMENT
5X
45X
4%
$5B
European Commission
Key Findings
2018
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Mobilising Europe's hidden tech talent
pool can unlock huge upside
Europe is producing $B+ companies at a
level that is 15x+ higher than a decade ago
Europe's ecosystem is more distributed
and more interconnected than ever - there
are now 5.7m professional developers
in Europe, up by 200,000 on 2017. This
compares to the 4.4m in the US, a number
that stayed flat year on year.
European $B+ companies founded in the past 15 years, including
a record 17 new companies that first surpassed the milestone in
2018. Europe has also now produced 12 companies with a $5B+
valuation, of which 5 have grown to more than $10B.
Still more European tech hubs will
emerge. Cities such as Cologne, Warsaw
and Vienna all have larger developer
populations than Stockholm and active
local tech communities, but have yet to
attract as much investment. In fact, there
are 15 European cities with professional
developer populations of 50,000+ that
have seen less than $1B in total capital
investment since 2013.
Two companies founded in the 2000s had reached $B+ by 2008.
Compare that to 31 founded in the 2010s that reached that
milestone by 2018 - an increase of 15.5x. Where will the 2010s
end up by 2028?
PROFESSIONAL DEVELOPERS
$B+ COMPANIES
EMERGING TECH HUBS
SUCCESS GROWTH
5.7M
61
15
15X
Key Findings
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The State of
European Tech
2018
Welcome to the State of European Tech 2018
Executive Summary
01.1
01.2
ARTICLES
This is the fourth edition of the State of European Tech
report, the single, most comprehensive data-driven story
of European technology today. We've gathered data from
world-class data partners and a survey of 5,000 members
of the tech ecosystem, from founders to students,
investors to researchers. We've tried to tell the most
important stories. We cover diversity and inclusion, talent,
regulation, investment, research and development, and the
great, global disrupters out of Europe.
Back once again like
the renegade...er...
data analysers!
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We write this report to shine a light
on the issues that matter in the
European ecosystem. We aim to enrich
conversations, highlight challenges,
and support more informed decision
making by closing the knowledge gap
between perception and reality.
Each year we aim to produce a
resource that is more comprehensive
than the last. To this end, you'll notice
that this report is a lot longer than in
previous years. This was a deliberate
decision. Our data is open, and our
hope is as many people as possible will
use it to help tell the stories that matter
to them in Europe.
We're proud to present the 2018 edition of the State
of European Tech report, which is once again the
single, most comprehensive data-driven story of
European technology today.
It's been another incredible year
for European tech - but there are
some significant challenges too
Welcome to the
State of European Tech 2018
Photo: Anrietta Kuosku
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For the past four years, we've produced an exhaustive deep dive into
the European tech ecosystem by analysing the rich insights of our data
partners. Every year the data busts another myth about our ecosystem:
from pointing out that Europe actually has more developers than the US,
to quantifying European advances in deep tech.
Executive Summary
Another record breaking
year for European tech
European tech
achieving density
Technology has become
a motor for growth in the
European economy
Europe is a research
powerhouse
This year we're at risk of sounding like a
broken record about breaking records
- but we can't dispute the data. In
another extraordinary year, investment
in European tech reached a record
$23 billion - up from $5 billion just five
years ago. European founders created
17 billion-dollar companies. And in
2018, Europe produced three of the ten
biggest venture backed public listings.
Last year we found that Europe was
experiencing a 'Battle Royale' for talent.
This year was the year Europe figured
out how to effectively mobilise its
deep pools of talent. The tech sector is
attracting more participants - whether
measured by the healthy increase in
professional developers or the uptick
in talented executives moving into tech
from other sectors. The report shows
dense areas of talent coalescing around
universities, anchor tech companies,
and innovation hubs, leading in turn
to increases in investment, and
growth in anchor tech companies.
This all contributes to 'density' -
which historically has been a crucial
precondition for explosive growth.
Europe is certainly achieving density,
but it's doing it its own way. What is
interesting is that the developer pool is
growing fastest outside those countries
that have historically attracted the most
investment: Turkey, Spain and Russia's
pool of developers have been deepening
the most rapidly. All this will lead to a
massive potential upside for the wider
European economy as capital eventually
flows into these new communities.
At a macro-level, Europe's technology
sector is booming as the wider
economy is stuck in the doldrums.
As of Q3 2018, European growth was
flatlining at 0.2%, the lowest rate for
four years. Europe's software industry
is now growing at least five times
faster than the rest of the European
economy. This year's report suggests
that for a number of reasons, this
motor will only become more powerful.
The importance of the tech to the
overall economy will only increase.
This year's report also shows
that we are only scratching the
surface of the potential of Europe's
research community, and not fully
harnessing our own cutting-edge
science. An analysis by CERN, one
of this community's most influential
members, demonstrates that as
science and tech converge further,
there is huge scope to strengthen
the link between European STEM
and startups. Europe has a research
community larger than U.S. and China
- we need to make sure this becomes
the hugely powerful differentiator it
should be.
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Let Europe be Europe
A big diversity and
inclusion problem
A word to the naysayers: irrespective
of the huge strides European tech has
taken in the last few years, our tech
sector will continue to be compared to
the performance of Silicon Valley.
And as the ecosystem accelerates,
we are increasingly cool with that! For
a long time, US VC has outperformed
European VC in terms of portfolio
returns, but that is increasingly untrue.
The latest historical performance data
shows that European venture has been
outperforming US venture in recent
horizon periods. We believe this is a
bellwether for a changing landscape.
Let's not forget that 95% of the value
creation of today's US tech sector
is from companies founded 15 years
ago or more, and that the early tech
successes of ARM, Amadeus and Ocado
were not venture-backed. Given that
21 European companies have been
founded and scaled to billion-dollar-
plus valuations with the support of
venture capital since 2010 alone, we are
confident that Europe has caught up on
North America's head start.
This year's report also unearths several
figures which are extraordinary for
all the wrong reasons. The State of
European Tech has always highlighted
the challenges Europe faces, but this
year, we've identified a particularly
serious problem: 46% of women told us
they have experienced discrimination
in the European tech industry. As our
chapter on diversity and inclusion
shows, this statistic is the tip of the
iceberg. While most investment figures
in this report spell good news, the fact
that all-male founding teams received
around 93% of the capital and 85% of
the deals speaks for itself. Women and
minorities are underrepresented at
every level of the ecosystem. Corporate
policy on diversity and inclusion is still
way behind where it needs to be. This
stark reminder of our shortcomings is
timely, and it's important that we draw
the right conclusions.
Reporting this data is a first step in the
right direction. Only by measuring the
problem can you start to solve it. To
take on this challenge, we've worked
with Diversity VC to launch an industry-
first resource: a practical and hands-on
guide for technology entrepreneurs
that will help them build companies
that have diversity and inclusion at
their core. It's not a complete solution,
but we hope it's a contribution that
founders will find useful nonetheless.
You can find the toolkit at
www.inclusionintech.com
Executive Summary
01.2
Photo: Kai Kuusisto
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But we can still learn from
the successes and failures
of others
Another broken record:
Bridge the funding gap,
democratise European
tech's success
An ecosystem irreversibly
changed
Thank you to all our partners
As Europe catches up, it is vital that we
make the most of our second mover
advantage - both in the companies we
build, and in our approach to building
them. European tech has escaped most
of the backlash which has engulfed
big US technology companies and
characterised media coverage this
last year. For this to continue, we'll
need to learn from past failures, and
act ethically from day one. European
technologists have already shown we
can learn from the lessons of the past
in terms of business strategy. Before
he founded Skype, Atomico's CEO
Niklas Zennstrm founded a streaming
company called Kazaa. Kazaa was a
failure, but a group of Swedes led by
Daniel Ek were paying close attention,
and learned important lessons.
Learning from the mistakes of the
previous generation led to the creation
of Spotify. Spotify has unequivocally
proven that today, European founders
can raise the right capital, hire the best
talent, go the full distance, stave off
ferocious competition and win on a
global stage. Spotify will now become
the spur and inspiration for other
European breakout successes.
This report has consistently highlighted
the need to close the institutional
investor funding gap. Over the last five
years, pension funds have invested just
$1.7 billion in European VC, but have
invested 45x more in European buyout
funds, equivalent to more than $75B
over that period. Meanwhile, family
offices and high net worth individuals
have spent the last five years investing
$5 billion in venture capital. If pension
funds can rebalance their allocations
away from legacy industries towards
gamechanging technology instead, they
can democratise access to the spoils of
European tech.
The European ecosystem has levelled
up. Today, as Spotify has shown us,
European founders have access to
sophisticated investors, can hire the
best talent, go the full distance, stave
off ferocious competition, go public
and win on the global stage. Europe is
now reaping the early rewards from the
transformation of its tech ecosystem-
the seeds of success this year were
planted a decade ago. That is why we
should expect even greater success
in the years to come. As long as we all
continue to learn from both success
and failure, will European tech reach
the heights we know it to be absolutely
capable of.
I'd like to dedicate my final words to
thank all of our data partners and most
importantly, Slush and Orrick. Without
them this report would not have been
possible.
Executive Summary
01.2
Tom Wehmeier
Partner, Atomico
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Scrolling through the figures of
the State of European Tech 2018
report, it is easy to feel a nice sense
of confirmation to what we've been
seeing and hearing throughout the
year in countless conversations with
entrepreneurs: European tech is
graduating. Record numbers of both
raised funding and exits speak louder
than words, and they have interesting
consequences.
As the amount of successful scale-up
companies continues to rise on the
continent, so does the need for ever
greater amounts of top tier talent.
As the access to venture capital is
no longer the biggest bottleneck for
European tech, our eyes are turning
towards cultivating the next generation
of world-class talent for the current and
future tech companies that are set out
to solve some of the biggest challenges
on the planet.
For this we need a diverse talent pool to
be part of building the European tech
companies.
The problem of diversity that Europe,
like the rest of the world, is having can
be turned into an opportunity. By lifting
up a more diverse set of role models will
affect the decisions of to-be founders.
Emphasizing the role that humanities
and arts, in addition to STEM, will
play in the future development of
technological solutions should be done
upfront if we want to gain an edge from
the magnificent creative industry in
Europe.
One more additional thing that
Europe really stands to benefit from
is our strong academia. Nailing
the combination of bleeding-edge,
hardcore research and practical, world-
class company building should be one
of our main targets for the upcoming
years.
Almost all businesses that want to
make it big in Europe have to think
international or global from the
beginning. This is a mindset that
we should utilise also in the next
generation of education for future
entrepreneurs. Stay tuned!
A Word from Slush
Executive Summary
01.2
Andreas Saari
CEO, Slush
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There has been a nearly five-fold
growth in European venture capital
investment in the last five years.
There are five times the number of
unicorns with at least 17 new billion
dollar plus companies added in the
past year alone. The European tech
sector has produced nearly four times
the job growth rate of the general
economy, resulting in a talent pool of
programmers and STEM researchers
surpassing that of the United States.
Tech and innovation is no longer on the
sidelines in Europe it is driving the
economy. That's the clear take-away
from this year's State of European Tech
Report.
At Orrick, we see it in our practice
every day as we have helped founders,
investors and corporate venture clients
raise or deploy more than $___ across
Europe over the past year.
As a global tech law firm, we're not
surprised to see investors from around
the world chasing strong returns from
their European investments. While U.S.
investment returned to 2016 levels after
another record-breaking performance
last year, investment from Asia
continued to grow.
We're encouraged by corporate venture
investment growth, particularly from
outside traditional tech industries.
This affirms the strong demand for
innovation as companies in every
sector recognize the need to adapt to
the tech transformation.
Altogether these trends point to a
robust future for European tech.
However, the Report's purpose is
to shine a light on all of "the issues
that matter" in the European tech
ecosystem. We applaud Atomico for
highlighting some deeply troubling
ones: 46% of women in tech report
experiencing discrimination and only
7% of capital went to female founded
companies or mixed gender founding
teams. That's not right and it's not
sustainable if Europe truly wants to
innovate. We also applaud Atomico's
collaboration with Diversity VC to
provide guidance to founder teams on
how to build a diverse and inclusive
culture. Awareness and education
are a key first step. Investors have an
essential role to play. The good news
is that there's an incredible amount
of unfunded talent out there. Let's all
participate in the conversation about
how to dramatically improve next year's
results.
We're grateful to Atomico for the
opportunity once again to help provide
this data to the tech community in
Europe and globally. We hope you
find it as useful as we do in seeing the
patterns and opportunities in this rich
and promising ecosystem.
A Word from Orrick
Executive Summary
01.2
Christopher Grew
Partner,
Technology
Companies Group
Orrick
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While Europe's overall economy and traditional industries
are stuck in the doldrums, booming tech represents
the best hope for growth. Tech firms are powering job
creation and ambitious founders are tackling some of the
world's biggest problems. All of that has members of the
ecosystem optimistic - except in the U.K. where sentiment
is not at the same levels as elsewhere.
Tech & the
European Economy
Powering Workforce Growth
Tech: The Motor for GDP Growth
Heritage as opportunity
Smiles (almost) all round in European techv
Tech for Good: A European Opportunity?
02.1
02.2
02.3
02.4
02.5
Continuing to drive
significant growth
ARTICLES
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French tech workforce growth in 2018,
based on a comparison of the size of
the workforce in October 2018 versus
October 2017.
WORKFORCE GROWTH
France's tech worker population grew at the fastest
rate of any European country in 2018
7.3%
The rate of tech workforce growth across Europe is not equally distributed with workforces in some countries
growing much faster than others. France, for example, hit 7.3% growth in 2018, making it comfortably the fastest-
growing tech workforce in Europe
YoY growth in the worker population of the
Top 20 largest tech workforces by country in
2018
DATASET : 1 1 -20
Source:
L EGEND
2018
Note:
Based on an analysis of sample pool of LinkedIn members and
the difference between those in 2018 working in the Tech
Sector in each country from this sample pool and those in 2017.
YoY growth (%)
3.9%
3.5%
3.4%
3.3%
3.3%
3.1%
3.0%
2.8%
1.9%
1.1%
Finland
Italy
Sweden
United Kingdom
Denmark
Romania
Netherlands
Bulgaria
Czech Republic
Hungary
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
The rate of tech workforce growth across Europe
is not equally distributed, with workforces in some
countries growing much faster than others.
Powering Workforce Growth
02.1
Photo:Jussi Ratilainen
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The implication of this sustained difference in growth rates is starkly visible when looking at indexed growth of the
tech (software) and non-tech parts of the European economy. Over the past 15 years, tech (software) has grown to
hit 194% of its relative value in
Chain linked volumes of tech and non-tech
GVA (indexed 2002-2016)
Source: Eurostat
LEGEND
Tech
Non-tech
Note:
2016 is the most recent year for which full NACE breakdowns of
European GVA are available. Tech refers to the European
software industry, or NACE J62-63. Non-tech is everything
else.
Chain linked volumes (indexed 2002-2016)100
100
107
112
121
133
136
130
136
146
155
163
173
188
194
124
125
118
123
126
128
129
133
141
141
2002 2003 2004 2005 2006 2007 2008 2009 2010
2011
2012
2013
2014
2015
2016
75
100
125
150
175
200
While the long-term historical trend in relative growth rates has been impressive, more recently the speed of
growth between tech and non-tech has diverged even further. Today, the European tech (software) industry is now
growing 5x faster than the rest of the economy
% Growth YoY of tech and non-tech
contribution to European economy by GVA
(2016 versus 2015)
Source: Eurostat
LEGEND
YoY growth (%)
Note:
*Tech refers to the European software industry, or NACE J62-
63
YoY growth (%)3.1%
0.6%
Tech*
Non-tech
0.0
1.0
2.0
3.0
There is an ever-widening gap in the indexed growth rates of the tech (software) and non-
tech parts of the European economy. Over the past 15 years, tech (software) has grown to
hit 194% of its relative value in 2002.
While the long-term historical trend in relative growth rates has been impressive, more
recently the speed of growth between tech and non-tech has diverged even further. Today,
the European tech (software) industry is now growing 5x faster than the rest of the economy
Latest figures show Europe's
software industry Gross Value Added
is growing 5x faster than the rest of
the European economy
ECONOMIC GROWTH
Europe's software industry growth dramatically
outpaces the rest of the European economy
5x
Eurostat
Eurostat
Eurostat
Tech: The Motor for GDP Growth
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Over the last 10 years, many of these traditional industries upon which the European economy is so dependent
have either stagnated or declined, undermining the overall rate of growth in European Gross Value Added
Chain linked volumes of tech and selected
traditional industries GVA (indexed 2007-
2016)
Source: Eurostat
LEGEND
Tech
Real estate activities
Wholesale and retail trade, transport, accommodation
and food service activities
Industry
Financial and insurance activities
Construction
Telecommunications
Note:
2016 is the most recent year for which full NACE breakdowns of
European GVA are available. Tech refers to the European
software industry, or NACE J62-63.
Chain linked volumes (indexed 2007-2016)100
103
98
102
110
117
123
131
142
146
103
107
109
112
118
118
103
88
95
100
103
110
111
94
103
89
90
89
87
90
94
95
83
85
85
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
60
80
100
120
140
Yet the European economy today remains heavily dependent on traditional industries, such as industrial
manufacturing, construction, retail and transportation
Share of total gross value added in Europe
Source: Eurostat
LEGEND
% of total GVA (2002)
% of total GVA (2016)
Note:
Europe is based on EU-28. 2016 is the most recent year for
which full NACE breakdowns of European GVA are available.
Tech refers to the European software industry, or NACE J62-63
% of total gross value added
21%
19%
6%
2%
2%
1%
1%
1%
19%
19%
11%
11%
5%
4%
3%
Industry (except construction)
Wholesale and retail trade, transport,
accomodation and food service
activities
Public administration, defence, educa
Real estate activities
Professional, scientific and technical
Construction
Financial and insurance activities
Arts, entertainment and recreation; ot
Tech
Agriculture, forestry and fishing
Telecommunications
Publishing, motion picture, video, tele
Publishing activities
Motion picture, video, television progr
0
5
10
15
20
Over the last 10 years, many of these traditional industries upon which the European
economy is so dependent have either stagnated or declined, undermining the overall
rate of growth in European Gross Value Added
Yet the European economy today remains heavily dependent on traditional
industries, such as industrial manufacturing, construction, retail and transportation
Tech: The Motor for GDP Growth
02.2
Eurostat
Eurostat
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The European tech (software) industry contributes around $400 billion to the European economy today, though it
remains just a fraction of total European Gross Value Added, accounting for just 2.5% of total European GVA
Tech industry contribution to the European
economy by total Gross Value Added ($B) and
% of total (2002-2016)
Source: Eurostat
LEGEND
Tech
Tech as % of total GVA
Note:
2016 is the most recent year for which full NACE breakdowns of
European GVA are available. Tech refers to the European
software industry, or NACE J62-63
Gross Value Added ($B)Tech as % of total GVA$194.0B
$208.0B
$234.0B
$264.0B
$263.0B
$300.0B
$335.0B
$376.0B
$1.8B
$1.8B
$1.8B
$1.9B
$1.9B
$2.0B
$2.1B
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2012 2013 2014 2015 2016
0.0
100.0
200.0
300.0
400.0
1.6
1.8
2.0
2.2
2.4
The European tech (software) industry contributes around $400 billion to the
European economy today, though it remains just a fraction of total European
Gross Value Added, accounting for just 2.5% of total European GVA
At ~$400 bllion, Europe's software industry
is still just a fraction of overall European
Gross Value Added
Eurostat
Eurostat
Tech: The Motor for GDP Growth
02.2
Latest data shows Europe's software
industry accounts for 2.5% of total
Gross Value Added in Europe, up from
1.9% 10 years ago
ECONOMIC GROWTH
2.5%
Photo: Kai Kuusisto
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As technology becomes an increasingly more transformative force across all parts of the economy, there is a huge
opportunity to digitise and reignite Europe's traditional industries with trillions of dollars of value in play. The
combined market capitalisation of European constituents of the S&P Global 1,200 equates to $8.8 trillion in just
the top 10 most valuable traditional industries.
Total market cap of European public
companies in S&P Global 1,200 by industry
group ($B)
Source: S&P Global Market
Intelligence
LEGEND
Total Market Cap ($B)
Note:
Based on an analysis of the industry breakdown by market cap,
revenue, market cap/revenue multiple and age of the 328
constituents of the S&P Global 1,200 Index from Europe. Data
as of October 2018.
Total market cap ($B)
$1,270B
$1,231B
$1,150B
$924B
$893B
$777B
$734B
$648B
$608B
$523B
Energy
Financial Services
Bio & pharma
Materials
Food & Drink
CPG
Retail
Industry
Insurance
Mobility
0
200
400
600
800
1,000
1,200
1,400
Those same 300 or so European companies control more than $6.9 trillion in annual revenue and represent a giant
potential opportunity for any European tech companies that seek to take on those incumbent giants in their
traditional industries.
Total revenue of European public companies
in S&P Global 1,200 by industry group ($B)
Source: S&P Global Market
Intelligence
LEGEND
Total revenue ($B)
Note:
Based on an analysis of the industry breakdown by market cap,
revenue, market cap/revenue multiple and age of the 328
constituents of the S&P Global 1,200 Index from Europe. Data
as of October 2018.
Aggregate LTM revenue ($B)
$1,642B
$1,012B
$906B
$843B
$589B
$537B
$422B
$375B
$344B
$269B
Energy
Mobility
Materials
Insurance
CPG
Financial Services
Food & Drink
Industry
Bio & Pharma
Retail
0
250
500
750
1,000
1,250
1,500
1,750
As technology becomes an increasingly more transformative force across all parts of
the economy, there is a huge opportunity to digitise and reignite Europe's traditional
industries with trillions of dollars of value in play. The combined market capitalisation
of European constituents of the S&P Global 1,200 equates to $8.8 trillion in just the top
10 most valuable traditional industries.
Those same 300 or so European companies control more than $6.9 trillion in annual
revenue and represent a giant potential opportunity for any European tech companies
that seek to take on those incumbent giants in their traditional industries
Total value by market cap of European
companies from traditional industries in
the S&P Global 1,200
TRADITIONAL INDUSTRY
There is huge equity value locked up in
traditional industry in Europe
$8.8T
S&P Global Market Intelligence
S&P Global Market Intelligence
S&P Global Market Intelligence
Heritage as Opportunity
21
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Interestingly, the median age of the incumbent companies in these industries is well over 100 years in most cases.
In the battle of incumbent versus startup, it is not the young that beats the old or the large that beats the small. It
is those that are fast that are more likely to succeed against the slow.
Median age in years of European public
companies in S&P Global 1,200 by industry
group
Source: S&P Global Market
Intelligence
LEGEND
Median Age of Companies (years)
Note:
Based on an analysis of the industry breakdown by market cap,
revenue, market cap/revenue multiple and age of the 328
constituents of the S&P Global 1,200 Index from Europe. Data
as of October 2018.
Median age (years)
155
154
135
130
125
113
102
92
66
62
Insurance
Financial Services
Industry 4.0
Food & Drink
CPG
Materials
Mobility
Biology 2.0
Retail
Energy
0
100
25
50
75
125
150
175
Interestingly, the median age of the incumbent companies in these
industries is well over 100 years. In the battle of incumbent versus startup,
it is not the young who beats the old or the large who beats the small. It is
those who are fast that are more likely to succ ed against the slow.
Median age in years of the 348 European
companies that are constituents of the
S&P Global 1,200 index. This compares to
64 for North American companies. Do the
old have the speed it takes to respond to
tech-enabled change?
TRADITIONAL INDUSTRY
Europe's most valuable public companies - 95%
of which come from traditional industries - have
demonstrated remarkable endurance until now
102
Heritage as Opportunity
02.3
S&P Global Market Intelligence
S&P Global Market Intelligence
Photo: Joonas Linkola
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Europe's tech ecosystem remains characterised by a strong level of growing optimism about the future. This
increase in optimism is most evident in Eastern and Southern Europe, where real momentum in building the local
tech ecosystems is evident. The UK, perhaps unsurprisingly, registered the largest downturn in optimism by a wide
margin.
Are you more or less optimistic about the
future of European technology today than
you were 12 months ago?
Source:
LEGEND
More
About the same
Less
% of respondents
Central Europe & Baltics
DACH
Eastern Europe
France & Benelux
Nordics
Southern Europe
UK & Ireland
0
20
40
60
80
100
Europe's tech ecosystem remains characterised by a strong level of growing optimism
about the future. This increase in opti
is
is most evident in Eastern and Southern Europe
where there is real momentum. The UK, perhaps unsurprisingly, registered the largest
downturn in optimism by a wide margin.
of the European tech community is either more
optimistic about the future of European tech, or
maintain the same levels of optimism compared
to 12 months ago. This remains the same as
2017, when 91% of respondents were more
optimistic or the same.
EUROPEAN TECH OPTIMISM
There continues to be a very strong sense of
optimism across the European tech ecosystem
90
S&P Global Market Intelligence
Smiles (almost) all round in
European tech
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Munish Varma
Rosie Dallas
SoftBank Vision Fund
Fat Llama
2018 has seen some strong wins for the European tech ecosystem and
we are resoundingly optimistic and excited by the opportunity set we
see emerging. There were several large IPOs in the region signalling
that the sector is maturing while still generating opportunities to
partner with emerging, disruptive companies that combine market
leadership, multiplying network effects and data-driven approaches
to create transformative businesses. Enhanced access to early
growth capital is also a hugely positive market driver, enabling more
companies to scale rapidly while still prioritising innovation."
I'm definitely more optimistic than 12 months ago. I think we're seeing
a marked shift in ambition in Europe, and crucially, that's being
matched at an investor level. What's more, the increased cost of living
and hiring competition seem to have taken the blinkers off a lot of
Valley-bound entrepreneurs. This can only benefit Europe."
"
"
2018 has seen some strong wins for the European tech
ecosystem and we are resoundingly optimistic and
excited by the opportunity set we see emerging.
I'm definitely more optimistic than 12 months ago. I
think we're seeing a marked shift in ambition in Europe,
and crucially, that's being matched at an investor level.
The factors that are driving optimism around the future of European tech are many and varied. But when asked to
state the most important grounds to be optimistic, respondents gave a clear number one reason: the people that
make up the tech ecosystem
What, if anything, makes you feel optimistic
about the state of the European tech
ecosystem?
Source:
LEGEND
% of respondents
Note:
Based on respondents that gave explicit responses only.
% of respondents
27%
25%
11%
11%
9%
7%
6%
5%
People
Growth & Momentum
Startup Ecosystem
European Collaboration & Diversity
Capital Availability
Tech Innovation
Regulation & Political Climate
Values & Ethics
0
5
10
15
20
25
30
The factors that are driving optimism around the future of European tech are many and
varied. But when asked to state the most important grounds to be optimistic, respondents
gave a clear number one reason: the people that make up the tech ecosystem
Smiles (almost) all round in European tech
02.4
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There is strong agreement across all stakeholders, including within the public sector, that European tech
entrepreneurs are changemakers for a better world and that they will have a bigger impact on helping to important
global problems than Europe's governments.
European technology entrepreneurs will do
more to address societal challenges
Source:
LEGEND
Agree
Neither agree nor disagree
Disagree
% of respondents
Founder or startup/scale-up employee
Investor
Policymaker or public sector employee
Other
0
20
40
60
80
100
Selected early-stage European tech
companies with a strong focus on solving a
major global or societal challenge that have
raised in the past year from top investors
Area of Focus
City
Country
Round
Date
Selected Investors
Cambridge Glycoscience
Biology 2.0
Cambridge
UK
3Q18
Y Combinator
Cytera CellWorks
Biology 2.0
London
UK
3Q18
Y Combinator
Lifebit
Biology 2.0
London
UK
3Q18
Connect Ventures, Pentech Ventures, Tiny VC
GTN Limited
Biology 2.0
London
UK
2Q18
Octopus Ventures, Pentech Ventures
Quit Genius
Digital Health &
Wellness
London
UK
2Q18
Force Over Mass Capital, Village Global, Y Combina tor
TPH.co
Future of Retail
Stockholm
Sweden
2Q18
Propel Capital, STING, Seedcamp, The Nordic Web
Ventures, Wave Ventures
Veratrak
Biology 2.0
Oxford
UK
2Q18
Seedcamp
Carbo Culture
Future of Energy
Helsinki
Finland
1Q18
Wave Ventures, Lifeline Ventures, Starlight Ventures
Disior
Digital Health &
Wellness
Helsinki
Finland
1Q18
Maki.vc
KisanHub
Future of Food &
Drink
Cambridge
UK
1Q18
IQ Capital Partners, Notion Capital
Sixfold Bios cience
Biology 2.0
London
UK
1Q18
Y Combinator, LombardStreet.io Ventures
ThinkSono
Digital Health &
Wellness
London
UK
1Q18
AI Seed, WestTech Ventures
WeFarm
Future of Food &
Drink
London
UK
1Q18
Localglobe, True Ventures, ADV, Norrsken Foundation
Fat Lama
Future of Retail
London
UK
4Q17
Blossom Capital, Greylock Partners, Atomico, Y Combinator
Hygglo
Future of Retail
Stockholm
Sweden
(SWE)
4Q17
Norrsken Foundation, Schibsted Growth
LabGenius
Biology 2.0
London
UK
4Q17
Acequia Capital, Kindred Capital, System.One
Source:
Tech for Good:
A European Opportunity?
There is strong agreement across all survey respondents, including within the public
sector, that European tech entrepreneurs will have a bigger impact than European
governments when it comes to solving important global challenges.
undefinedIn Partnership with
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While the vast majority in Europe's tech ecosystem
agrees diversity is a good thing, the community has
a major diversity problem. Women and minorities are
underrepresented at every level of the ecosystem.
Corporate policy on diversity and inclusion still lags.
Diversity
& Inclusion
We've Got a Problem
We're All Part of the Problem
Accelerating Change
03.1
03.2
03.3
Perception and Reality
ARTICLES
27
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No single question in the survey received a stronger level of agreement than this one. When asked if having a
diverse team is a bene t to company performance, almost 90% of respondents agree. If the European tech
ecosystem wants to achieve its full potential, then diversity and inclusion has to be at its core.
Having a diverse team is a bene t to
company performance
Source:
LEGEND
Agree
Neither agree nor disagree
Disagree
Female
Male
0
10
20
30
40
50
60
70
80
90
100
% of respondents
The European tech community is dominated by men. Women account for just 22% of participants in tech-related
Meetup events in the region. Notably, the industry is failing to make any meaningful progress, having seen an
increase of just a single percentage point in the level of female participation at European tech community events
in the past two years.
Share of female attendees in tech-related
Meetup events in Europe
Source:
LEGEND
Total in Europe (%)
Note:
% of the reported gender of attendees only.
% of female attendees21%
21%
22%
2016
2017
2018
0
5
10
15
20
25
The European tech community is dominated by men. Women account for just 22% of
participants in tech-related Meetup events in the region. Notably, the industry is failing to
make any meaningful progress, having seen an increase of just a single percentage point in
the level of female participation at European tech community events in the past two years.
No single question in the survey received a stronger level of agreement than this one.
When asked if having a diverse team is a benefit to company performance, almost 90% of
respondents agree. If the European tech ecosystem wants to achieve its full potential, then
diversity and inclusion has to be at its cor .
We've Got a Problem
Pip Jamieson
The Dots
Diversity is one of our core values.
It's vital to our business and has
been embedded from the beginning.
Diverse teams are better for
business, and better for creativity.
28
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We found only 1 female CTO out of 175 CTOs that work at VC-backed European tech companies that raised a Series
A or Series B in the past year.
Gender composition by job title for
Executive-level positions of selected
European Series A and B venture-backed
companies
Source:
LEGEND
Female
Male
Note:
Based on a sample of executives in CxO positions at 270
European VC-backed tech companies that raised a Series A or
B round between 1 October 2017 and 30 September 2018.
% of Executives
6%
1%
11%
20%
21%
9%
9%
19%
94%
99%
89%
80%
79%
91%
91%
81%
Chief Executive Officer
Chief Technology Officer
Chief Operating Officer
Chief Financial Officer
Chief Marketing Officer
Chief Revenue Officer (or similar)
Chief Product Officer
CxO Other
0
20
40
60
80
100
The 'class of 2018' of VC-backed European tech companies
shows no improvement compared to similar analysis from
2017.
Share of women by position of senior leaders
and founders of selected European Series A
and B venture-backed companies (2018
versus 2017)
Source:
LEGEND
2017
2018
Note:
Based on a sample of Founders and executives in CxO
positions at 270 European VC-backed tech companies that
raised a Series A or B round between 1 October 2017 and 30
September 2018. 2017 data is based on a similar sample.
6%
2%
6%
9%
6%
1%
5%
9%
% of CEOs
% of CTOs
% of Founders
% of all CxO leaders
The 'class of 2018' of VC-backed European tech companies shows no
improvement compared to similar analysis from 2017
We've Got a Problem
03.1
We found only 1 female CTO out of 175
Os hat work a VC-backed
European tech companies that raised a Series A or Series B in the past year
Women are not equally present in tech communities in any
European country
Share of female attendees in tech-related
Meetup events by country
DATASET: TOP 10 C OUNTR I ES
Source:
LEGEND
2018
Note:
% of the reported gender of attendees only. Only countries
with 100+ reported female attendees included.
% of female attendees
33%
28%
28%
26%
26%
26%
25%
25%
25%
25%
Albania
Lithuania
Romania
Bulgaria
Latvia
Serbia
Bosnia and Herzegovina
Ukraine
Portugal
Sweden
0
5
10
15
20
25
30
35
The gender imbalance of the tech communities within different countries follows the
European-wide picture, though there are leaders and laggards. The top 10 countries for
female participation at tech-related Meetup events across the region is dominated by
countries from Eastern Europe, though it should be noted that female participation in the
number one country, Albania, only reaches 33%.
29
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Check Warner
Diversity VC
Lack of diversity is driven by a combination of factors that affect the
pipeline of talent in STEM subjects, the availability of diverse role
models, access to expertise and capital, social mobility and a range
of other issues. Europe is not necessarily tangibly better or worse
than other tech hubs however, given that Europe is such a diverse
range of geographies and people this should be a key strength. I
am encouraged to see the subject of diversity and inclusion appear
on the agenda of more tech companies and more VCs over the last
12 months and to see so many funds participating in initiatives led
by Diversity VC and others. I hope that this translates to sustained
and impactful change the first step though is understanding the
situation as it is today, which is why Atomico's commitment to this
subject is so encouraging."
"
Europe is not necessarily tangibly better or worse than other
tech hubs however, given that Europe is such a diverse range of
geographies and people this should be a key strength.
We've Got a Problem
03.1
The European tech industry's lack of diversity could not be more stark when it comes to how funding is allocated in
the region. It is arresting to see that male founders and founding teams receive 95% of the capital invested and
account for 90% of deals,. It is even more stark to see that the these shares have not changed in the last year
Capital raised and # of deals by founding
team gender (%)
Source:
LEGEND
Male
Female
Mixed
Capital raised (%) / # of deals (%)92%
95%
94%
93%
93%
93%
2%
1%
2%
3%
2%
2%
6%
4%
4%
4%
5%
5%
2013
2014
2015
2016
2017
2018
0
25
50
75
100
Capital Raised
The European tech industry's lack of divers ty could not be more stark when it comes to how funding is allocated in
the region. It is arresting to see that male founders and founding teams receive 95% of the capital invested and
account for 90% of deals,. It is even more stark to see that the these shares have not changed in the last years.
Source:
85%
86%
86%
85%
85%
85%
5%
5%
5%
6%
5%
5%
9%
9%
9%
9%
10%
10%
2013
2014
2015
2016
2017
2018
0
25
50
75
Capital raised (%) / # of deals (%)# of deals
DATASET: # OF DEALS
DATASET: CAPITAL RAISED
The European tech industry's lack of diversity could not be more stark when it
comes to how funding is allocated in the region. It is arresting to see that all-male
founding teams receive 93% of the capital invested and account for 85% of deals.
It is even more stark to see that these shares have not changed in the last years.
The European tech industry's lack of diversity could not be more stark when it comes to how funding is allocated in
the region. It is arresting to see that male founders and founding teams receive 95% of the capital invested and
account for 90% of deals,. It is even more stark to see that the these shares have not changed in the last year
Capital raised and # of deals by founding
team gender (%)
Source:
LEGEND
Male
Female
Mixed
Capital raised (%) / # of deals (%)92%
95%
94%
93%
93%
93%
2%
1%
2%
3%
2%
2%
6%
4%
4%
4%
5%
5%
2013
2014
2015
2016
2017
2018
0
25
50
75
100
Capital Raised
undefined31
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We've Got a Problem
03.1
Each node represents an article. Links connect articles sharing similar language. Clusters
form when many articles share strong similarity, revealing topics.
Blockchain: 11.91%
Fundraising: 43.58%
Diversity, Discrimination,
Harassment, Pay Equity, Women:
10.62%
Diversity: 3.8%
Discrimination: 1.2%
Harassment: 1.3%
Pay Equity: 0.3%
Women: 7.4%%
32
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Compared to other tech-related topics that gain large amounts of coverage in European news sources, it is notable
that articles related to diversity and inclusion are more likely to be led by a negative sentiment.
Share of total stories per topic by sentiment
summary
Source:
LEGEND
Positive
Neutral
Negative
Note:
Based on ~3,000 stories across 843 European news sources
(primarily UK focused) from Septemeber 2017 to September
2018.
% of total stories
Fundraising
Exits (IPOs & M&A)
Blockchain
Artificial Intelligence
Diversity & Inclusion
0
20
40
60
80
100
Compared to other tech-related topics that gain large amounts of coverage in European
news sources, it is notable that articles related to diversity and inclusion are more likely to
be led by a negative sentiment.
The narrative around diversity and inclusion is driven by US tech companies, leaving a huge vacuum in terms of
European voices stepping up into the discussion. In the absence of European voices taking part in the discussion,
does this leave an opportunity for leadership from European tech companies to help drive the discussion in a
positive way?
Top 10 most discussed companies in
European news stories focused on diversity
and inclusion in the tech industry
Source:
LEGEND
# of mentions
Note:
Based on ~3,000 stories across 843 European news sources,
primarily UK focused, from September 2017 to September
2018.
# of unique articles primarily talking about the company
157
88
45
37
35
30
24
23
21
20
Google
Facebook
Twitter
Microsoft
Apple
Salesforce
PwC
IBM
McKinsey
Amazon
0
100
25
50
75
125
150
175
Interestingly, the reporting we do see on diversity and inclusion in tech in European news
sources is driven by US tech companies. There's a huge vacuum of European voices
stepping into the discussion. We all have a responsibility to do and say much more.
We've Got a Problem
03.1
undefined34
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Despite many voices in the industry taking a negative view on the level of inclusion in Europe's tech industry,
people are much more likely to believe that the culture in their own companies is inclusive. In fact, more than three
quarters of founders or employees at Europe's private tech companies perceive their company's culture to be
inclusive.
The culture at my tech company is inclusive
Source:
Occupation
LEGEND
Agree
Neither agree nor disagree
Disagree
Founder or startup/scale-up employee
Investor
Policymaker or public sector employee
Other
0
20
40
60
80
100
% of respondents
Source:
Female
Male
0
20
40
6